Why the average price and the median price tell you different things
Every market report publishes both. They answer different questions, and the one you want is usually the median.
In August the average selling price across the TRREB area was $993,410 and the median was $850,000. Neither number is wrong. They are answers to different questions, and quoting one as though it were the other is the commonest way a market conversation goes astray.
What each one is
- The average is total dollars divided by number of sales. One $12 million sale in a month of ordinary transactions moves it noticeably.
- The median is the middle sale: half sold for more, half for less. The same $12 million sale moves it by one position in a list, which is to say barely at all.
That is why the average sits above the median in almost every housing market: prices have a floor and no ceiling, so the expensive tail pulls the mean up and leaves the middle where it is.
When the gap tells you something
A widening gap between average and median usually means the top of the market is more active than the middle, not that homes generally got more expensive. That is a mix effect, and it is the reason a headline saying prices rose can sit above a page of sales at unchanged prices.
It is also why Homula uses medians rather than averages for the neighbourhood price charts on a listing page, and refuses to publish one at all where fewer than eight homes sold in the quarter — because a median of three sales is really one home’s price wearing a statistic’s clothes.
Sources
Figures are as reported by the sources above on the date of publication. Nothing here is advice about a particular property or a particular household — for that, ask someone who can see your circumstances.